Why is bitcoin going up? – Forbes Advisor

Bitcoin (BTC) set another all-time high in trading this morning after breaking above the $72,000 level for the first time, bringing the world’s oldest cryptocurrency even closer to doubling in price in just the first few months of 2024.

Today’s gains bring bitcoin’s total year-to-date return to more than 70%, with more than a 4% gain just over the past 24 hours.

Last week, BTC broke through its previous all-time intraday trading high of $68,990 before ending the week right around $68,000.

Over the weekend, BTC continued its climb. Bitcoin has now not only regained all the ground it lost since the start of the crypto winter in May 2022, but also set multiple new all-time highs for the first time since November 2021.

In addition, Ethereum (ETH) is also gaining. ETH is also up more than 3% in the last 24 hours. The leading altcoin is now worth more than $4,000, a significant gain, but still shy of its pre-crypto winter peak of over $4,700, which was set for November 2021.

Why Is Bitcoin Going Up Right Now?

The current bullish sentiment in Bitcoin comes after the UK version of the US Securities and Exchange Commission, the Financial Conduct Authority, or FCA, said it was ready to consider trading in exchange-traded notes based on Bitcoin and Ethereum, known as also as ETN , in the United Kingdom

ETNs are similar to what the US calls exchange-traded funds.

This news comes amid continued investor optimism surrounding the SEC’s Jan. 10 approval of the 11 Spot Bitcoin ETF.

Spot Bitcoin ETFs allow institutional trading of Bitcoin at its spot or current price.

Previous Bitcoin ETFs could only trade Bitcoin futures. Futures are complex derivative instruments suitable for trading only by experienced investors.

Spot Bitcoin ETFs have sent the price of BTC soaring

Just as many investors expected before the SEC’s green light in January, the opening of the world’s oldest cryptocurrency to institutional investors has provided a significant price catalyst.

For example, BlackRock’s iShares Bitcoin ETF (IBIT), one of 11 new spot bitcoin ETFs, bought over $778 million worth of BTC on March 6 alone. This added up to 12,600 bitcoins flowing into IBIT’s coffers, reducing the world’s total available supply. Also, with the help of increasing demand, the purchase of IBIT increased the total value of BTC.

Mikel Morch, founder of digital asset fund ARK36, said: “The positive momentum in the cryptocurrency space has been further boosted by the impact of the US spot bitcoin ETF, with very significant inflows continuing. This development, along with UK regulatory progress, shows the growing acceptance of cryptocurrencies. . . by Western financial authorities.”

As a result of the SEC’s approval of the first spot bitcoin ETFs in the US, BTC jumped from under $50,000 at the time of the approval to over $72,000.

Is Bitcoin Facing a Price Correction?

With the heights Bitcoin has reached now, the fear of a price correction is seeping into the minds of some traders. Although Bitcoin has risen steadily since the US introduced the Spot Bitcoin ETF, cryptocurrencies, including Bitcoin, have a history of extreme volatility.

Bitcoin and other cryptocurrencies suffered after a wave of bankruptcies, crashes and negative court rulings rocked the crypto world in 2022.

First, there was the failure of Terra’s LUNA coin, which ushered in crypto winter in May.

After a brutal summer for crypto investors, the collapse of leading crypto exchange FTX in November of that year seemed like a fatal blow to cryptocurrencies.

Then, in 2023, both the SEC and the Commodity Futures Trading Commission filed multiple regulatory cases against some of the largest crypto exchanges and companies. These claims have hampered many exchanges and other crypto companies’ ability to do business in the US, the world’s largest economy.

During that period, Bitcoin fell from its pre-crypto winter peak of nearly $65,000 to a low of nearly $16,000 before starting its recovery. That was a 75% swing in price in just over a year.

What Does the Bitcoin Bounce Mean for Investors?

While Bitcoin appears to be in the midst of a significant rally, of course, there is no way of knowing how high the cryptocurrency will go before we see another correction.

While it looks more and more like Bitcoin is back on a long-term rally, traders of BTC and other cryptocurrencies are in unprecedented territory due to several factors. These include the geopolitical climate, economic indicators, crypto regulation and the Fed’s interest rate intentions.

Investors in the cryptocurrency industry have learned that even in the best of times, it is difficult to predict the short-term price action of digital assets. This is especially true in this market environment.